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Can you cash the insurance check without fixing the car?

By Beth Orenstein on July 26th, 2012

The damage to your car from that wreck doesn't look that bad. You could use that check from your auto insurance company for more pressing needs. Should you take the money and run?

You can if you want. Nothing says you have to deposit the check and get your car fixed. That is, as long as the check is made out to you. Sometimes the check for damages is made out to the body shop you're using, and sometimes it's made out to you and the lender who gave you the money to buy the car.

While you don't have to fix your car, you might want to think twice before you "cash out" and use the repair money for something else.

Risks you take by not fixing your car

Here are the problems that auto insurance experts say "cashing out" could create:

Safety should be your biggest concern. You may think the damages are only cosmetic and you don't mind driving a car that has lots of dents and dings. If you don't fix your car, are you putting you and your passengers at risk because the damage could get worse and make your car a road hazard?

Also, there could be more damage to your car than meets the eye. The adjuster who determined how much the repair would cost can't always see everything. Sometimes more damage is discovered only after the body shop starts working on your car and takes it apart. If you wait too long to have your car fixed, your auto insurance company may balk at paying for the additional damages discovered then. How does it know the additional damage was part of the wreck and didn't happen afterward? Or that it didn't happen because you waited to get the car fixed and made matters worse by driving a damaged vehicle?

You could be in another accident, but this time you can't let the repairs go because the car isn't drivable. Your insurance company won't pay for the same damages twice. Things could get complicated determining which is the damage from the first accident and which was caused by the second.

And if you don't repair the car, when you go to trade it in or sell it, it could be worth a lot less than that check was for.

Compare auto insurance but use it wisely

You should regularly compare auto insurance rates to be sure you have the best policy and price for your needs. The savings can be hundreds of dollars a year, even thousands.

But you may not want to divert your claims check should you be in an auto accident. In these tough economic times, it may be awful tempting to cash that check for repairs and spend it on something else, but it in the end it might not make financial sense.

Beth Orenstein
Beth Orenstein is a freelance writer. She works from her home in Northampton, Pa. A graduate of Tufts University with a bachelor's degree in English, she specializes in education, finance, real estate and medical topics.
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